Anthonyrgparham

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As my chart shows, even at their peak in 2005, profits as a percentage of revenues (read: premiums) were only slightly more than 7%a respectable number to be sure, but one that was beaten by 21 other industries (of the 50 or so total industries represented on the Fortune 500). So it was always a bit bizarre to have Kathleen Sebelius denouncing health insurer profits as immoral (in February 2010) when 2009 profit levels barely exceeded 3%. Few people understand that most profits from health insurers stem from their return on investing their pool of premium dollars while awaiting those dollars being paid out in claims months or even years after being collected. Wharton School insurance expert Scott Harrington calculates that in 2013, insurers in the individual (nongroup) insurance market overall earned negativepre-tax profits of 3.1% on the premiums they collected. That is, they actually lost 3.1 cents for every premium dollar collected, but they presumably made these losses up from their underwriting gains for group coverage as well as returns on investments. Comparing Health Insurers to Other Industries Moreover, everything is relative. Compared to retail pharmacies and other services, the largest players in the insurance industry have seen their return on revenue beaten down between 2010-2013 compared to the levels they enjoyed prior to the recession. The opposite has been true of retail pharmacies and other services, which now enjoy profit levels nearly double their counterparts in health insurance and managed care. Is Laboratory Corporation of America (9.9% return on revenues in 2013) engaged in immoral profit-making? And if its so insanely profitable, why did its stock price grow only half as quickly as the Standard and Poors 500 since July 2009? Profits In Health Insurance Under Obamacare – Forbes

Health Insurance Exchanges And Their Impact On UnitedHealth Group – Forbes

The effects of the ACA contributed to a 110 basis point decline in margins for the first quarter of 2014.Going forward we expect the margins to remain relatively unchanged and settle just under 8% levels. This is a result of two factors: the primary driver will be the change in requirements brought http://www.squidoo.com/alex-simring-squidoo about by the PPACA that requires insurers to maintain medical care ratios (medical costs divided by premiums) of 80% for individuals and 85% for group insurance. This is considerably higher than the medical care ratios that the company has maintained for years. Additionally, there may be pricing pressure from the growing competition brought about by customers exposure to multiple private health insurers due to the exchanges, which could impact margins. UnitedHealth has so far exhibited limited interest in offering policies via health insurance exchanges. UnitedHealth participated in just 13 exchanges across 10 states and the District of Columbia in 2014, out of nearly 100 exchanges nationwide. How is Competition Shaping Up? WellPoint, the second largest health insurance provider in the U.S., saw strong enrollments after heavy marketing spend related to the exchanges. It added nearly 600,000 new customers via the exchanges during the first OEP.Other large players such as Cigna have had a restricted presence until now and may look to expand their presence in the upcoming enrollment period only selectively. On the other hand, smaller regional players have seen gains from being early entrants on state exchanges, and plan to expand to other states in the coming years. http://www.forbes.com/sites/greatspeculations/2014/06/27/health-insurance-exchanges-and-their-impact-on-unitedhealth-group/